Bill aims to secure state staff benefits

Barrow seeks to aid retiring employees

State Rep. Regina Barrow has filed legislation aimed at preserving the retirement benefits of thousands LSU hospital employees in south Louisiana losing state jobs because of privatization.

“I don’t want employees to have to suffer because of decisions of the state,” said state Rep. Regina Barrow, D-Baton Rouge. “They did not choose to retire.”

One bill would allow the LSU hospital employees to take a lump sum retirement benefit and move it to another qualified pension plan or investment account.

Another bill would allow employees with 25 years-plus of service to retire at any age at full retirement.

Barrow said more senior LSU Earl K. Long Medical Center employees were blindsided when LSU changed course and moved to put the out-patient clinics in Baton Rouge under private operation. Originally, the outpatient clinics were to stay under LSU control and the employees stay on the state payroll.

“Many had the idea they could bump other employees” who had fewer years of service and keep state jobs, Barrow said. “Some were right at the line of retirement ... Many of them stayed there when some could have transferred to other places, but in the last 60 days, the plan changed.

“I don’t think the workers should be penalized for the actions of the state.”

Barrow said she will continue to work on the legislation “to make it stronger and better.”

The financial impact of the changes on the Louisiana State Employees Retirement System and the Teachers Retirement System of Louisiana have yet to be calculated. However, a LASERS executive said each are expected to increase “actuarial costs.”

LSU has still not filed employee layoff plans with the Department of State Civil Service. How many employees will be impacted isn’t known. Employees of at least five LSU hospitals could lose their state jobs as the facilities are converted to management by private hospitals in those communities. Work is ongoing to find a private partner for a sixth hospital under LSU’s Health Care Services Division.

The hospitals affected by public-private partnership deals under negotiation are those in Baton Rouge, Lafayette, New Orleans, Houma and Lake Charles. Bogalusa is also anticipated to go the private management route.

The only HSCD hospital that would remain under state operation is Lallie Kemp Regional Medical Center in Independence.

“It is our understanding that about 8,400 LASERS members will be impacted by these layoffs,” said Cindy Rougeou, LASERS executive director.

Rougeou said a decrease in active LASERS members will result in an increase in the state contribution to LASERS.

In addition, if members retire earlier than was assumed when calculating how much money would be necessary to fund pension requirements, then that loss could require future contributions by state government, Rougeou said.

TRSL executive director Maureen Westgard said there are 1,598 members at LSU public hospitals.

“You have some teaching doctors who have been there a long time with a lot of service bringing in research dollars” who could be impacted, she said.

Neither the LASERS nor TRSL boards have taken a position on Barrow’s legislation, yet.

“Based upon our preliminary review of House Bill 34, it would seem that the intent is to allow the member to have the present cash value of their annuity transferred to another qualified plan or IRA,” Rougeou said, adding that the move could very well change the dynamics that goes into calculating how much money needs to be collected now to pay for benefits in the future, which generally is what is called actuarial costs.

HB35 increases an eligibility for full retirement which does not currently exist, Rougeau said, “and we would also expect that to have an actuarial cost.”

TRSL general counsel Roy Mongrue said one of Barrow’s bills apparently would allow an employee to take the actuarial equivalent of the employee and employer contributions out of the system. The other would provide an early retirement option, he said.

Members today can retire with 25 years of service at age 55. One of Barrow’s bills would allow retirement at 25 years at any age without an actuarial reduction, Mongrue said. He said his expertise is not in system finances, but “any early retirement would have an actuarial cost.”

Mongrue said the board will review proposed retirement system legislation at its March meeting but probably not take a position until April so financial analysis can be completed.